A Blog About Understanding The Toyota Production System and Gaining Its Full Benefits, brought to you by "The Toast Guy"

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In 1989, after four years of what could be called ala carte improvement, my factory was introduced to policy deployment by Deming Prize winner, Ryuji Fukuda. Tossing a dozen Delta Airlines swizzle sticks on the glass of an overhead projector, Dr. Fukuda asked our team. “Does your plan look like this?” The shadow of the swizzle sticks pointing every which way created an impression.

In truth we had many plans – too many plans: There was a quality system to be installed, and a new computer system, and there were layout changes on the factory floor and in the office. There were new product plans and plans for new resources to build them. And finally there were Lean type initiatives to shorten lead-time and reduce cost. I used to joke, “We’re drowning in opportunities. The problem is deciding what to do first.”

Dr. Fukuda’s projection however, suggested a bigger problem: Not only were there too many improvement projects vying for scarce resources, but there was a likelihood that without a unifying direction and method for alignment, certain projects would work at cross-purposes to others. Our discovery from the one-week workshop was that while each department thought it had clear marching orders, when the various plans were overlaid, they resembled Dr. Fukuda’s swizzle sticks.

Today, I see a similar problem almost everywhere I go. Recently I gave a homework assignment to a client to list all key improvements on a single page. Two weeks later they sheepishly handed me a sheet printed in six point type. “It’s the only way we could fit them on the page,” they declared. The priorities were broken out by department.

“Why so many?” I asked. After some discussion, two chief reasons for the volume emerged:

Their quality system required them to identify areas annually for quality improvement. Owing to insufficient resources, few of these priorities could actually be addressed soon, but it was sufficient that they be identified. Many had been carried over from year to year.

Managers each received many additional objectives relating to cost or delivery. Like the departments they managed, the managers themselves were infinitely loaded down — drowning in opportunities.

Taking a page from Dr. Fukuda, I asked, “How do you know all of these priorities are aligned?”

“We don’t,” a manager quipped, ‘this is the first time we’ve seen them all together on one page.”

Another manager noted that indeed some of the various projects did conflict. Some cost cutting projects in department A, for example, would have a negative impact on quality or delivery priorities in a downstream function. And everyone agreed that there were more priorities than could possibly be addressed in a year. There were too many goals and too few means. “We work on the hot ones,” one manager added.

“Too much manager-work-in-process,”, I replied, “like trying to fit 10 pounds of potatoes in a five pound bag.”

“More like a hundred pounds,” an engineer exclaimed, “I feel like I’m spending 5% of my time on twenty projects, and almost nothing gets done.”

“How do we get out of this mess?” a top manager interjected.

I replied to her, “My own experience is that policy deployment isn’t an overnight success. But it starts with the question you just asked. It’s a new way of thinking that challenges the same mindsets as on the shop floor: push production, high inventory and local efficiency. So let’s start by agreeing on what’s most important to the customer and then aligning improvement projects regardless of department to the customer need. Then lets agree to limit the manager-work-in-process to enable these projects to flow.”

“But how do we know what’s most important to work on?, the top manager persisted.

I had asked Dr. Fukuda the very same question in 1989. So I responded to her with the same answer Dr. Fukuda gave me: “You’re the manager!”

As I watched Keith Lockhart conduct the Boston Pops to celebrate America’s birthday on July 4, another revolution that was occurring around the same time as the American Revolution came to mind.

By coincidence, Adam Smith’s Wealth of Nations was published in 1776, spawning a less dramatic, but more far reaching revolution: The first industrial revolution is said by some to have begun in England’s textile industry with Samuel Crompton’s invention of the “spinning mule” (1779) making cotton fabric at once both available and affordable.

America at that time was slow to adopt these new methods, but within a decade the winds of change blew west. Samuel Slater, an English mill employee, immigrated to Providence, Rhode Island rebuilding the spinning mule essentially from memory. Slater is often called the father of the American Industrial Revolution, as his mill led the little state of Rhode Island to become the U.S. manufacturing powerhouse of the 19th century. Ironically, the major impetus for this growth was an 1807 British embargo on US exports and imports, culminating in the War of 1812, a war which not only declared America’s economic independence but also brought us Francis Scott Key’s “Star Spangled Banner” not to mention Tchaikovsky’s War of 1812 Overturewhich is the finale of Boston’s annual 4th of July celebration.

By the late nineteenth century, the variety and complexity of mechanized production processes mushroomed. Manufacturers too became larger and more complex as the “second industrial revolution” emerged. Frederick Taylor’s scientific management and Henry Ford’s moving assembly line heralded the introduction of mass production, a movement that catapulted American manufacture to pre-eminence by the start of World War II. Many scholars attribute the outcome of that war to the productive superiority of the US at that time.

At the end of the First World War the west wind continued across the Pacific, once again to a little textile manufacture owned by Sakichi Toyoda. There, he invented the non-stop shuttle change type Toyoda automatic loom introducing the concept of autonomation that later became one of two pillars of the Toyota Production System. After the Second World War, Toyota’s need to produce for a smaller market created the need to move beyond mass production to Just-In-Time production (the second of the two pillars of Toyota’s production system.) W. Edwards Deming’s influence in post World War II is heralded in Japan as the start of the Third Industrial Revolution. This is the revolution that has brought us Lean.

Significantly, many western pundits have espoused a different “Third Industrial Revolution.” They call it the “off-shoring revolution.” In this revolution facilitated by the advent of information technology, the winds of change blow in the direction of the lowest cost per piece. The problem with this revolution is that it assumes status quo conditions and measures. Perhaps it should be called the fait accompli revolution.

For those of us who feel that capitulation is a bit premature there is the Northeast Shingo Made Lean In America Conference coming to Springfield Massachusetts in October 2011. Presenters like Craig Long from Milliken, the largest privately held textile manufacturer on the globe and experts like Harry Moser of the Manufacturing Reshoring Initiative will share their stories of challenge and success. We believe the real Third American Industrial Revolution — the one pioneered by Dr. Deming — is just beginning. Won’t you join us in October?

One of the more dubious outcomes of the French Revolution was the standardization of guillotining as the sole (and oft-employed) manner of capital punishment. Prior to the revolution, only nobility was entitled to such a humane demise. Commoners received their due by more excruciating means such as drawing and quartering. Today, it seems that American businesses suffer both fates.

For the last four decades in the name of efficiency, business entities have been ripped into pieces for consolidation with like entities from other regions. These attempts to ‘economize’ draw and quarter the cultures that have made the individual businesses creative and competitive. Employees, the most valuable resource, are driven to other occupations, their process knowledge lost forever. Only the ‘big brains’ are offered a chance to relocate. Machines are moved too, but the people who do the work are displaced. A manager responsible for these kind of consolidations confided to me about a recent plant closing and consolidation, “Strategically we lost far more in the good ideas, creativity and improvement thinking from company A, than we gained through economies of scale from its closing. But I couldn’t quantify the improvement part, so I had no choice.”

The sales proposition for consolidation is simple: 1 + 1 >> 2. In the short term, this appears to be true. As redundant jobs are eliminated (heads chopped) the bottom-line improves. A similar effect occurred at General Motors in the 1990’s: each time heads were chopped, the stock price increased – as did executive bonuses. To be sure, there are times when consolidation of resources can provide a unique synergy by gathering the best process knowledge together. But more often, only short-term gains are realized. In the longer term 1 + 1 << 1.

Around 1990, another mode of corporate execution became the strategy of choice: outsourcing. This began in high tech but has since spread to virtually every industry, public and private. I belonged to a regional Vice President of Operations Group in the ‘90’s where 75% of the members managed virtual organizations. They had a small administrative staff working for them but everything else was outsourced. I was Alice in Wonderland, still struggling to make products in the U.S. while most of the rest of the group preferred to discuss their stock options. Here was the rationale:

“Manufacturing is not a core competency. Our strength is innovation.”

“We live in a new age of commoditization,” they said, “outsourcing is the wave of the future.”

More like a tsunami. Guillotine! Separate the body from the head, leave the head here in the U.S. and ship the rest to the lowest wage locale available. Let the philosopher kings in the U.S. create, innovate and incubate. Ship the “low level” work somewhere else.

Once again, on paper the concept looked ingenious: 1 – .90 >> 1. Short-term earnings soared. But in actuality, undervalued production technology and process improvement was lost, ceded to other regions, who today are the new proprietors. A manufacturer of leather handbags commented to me, “We initially shipped our ‘low cost’ products” to China, but now those products are of higher quality than the ones we make here!” A manufacturer of sporting goods noted, “There are portions of our product for which the technology has been completely lost. We couldn’t buy it in the U.S. if we wanted to.” The emerging producers from far off places are not headless bodies, but whole entities that have assumed leadership in markets ranging from consumer electronics to automotive to healthcare. They can still go to the Gemba to observe and improve, because they have one.

Some days the trend to export jobs rather than products seems inexorable. On the other hand, there are notable product and service providers in our region who have made a choice to build their futures in America by learning to compete in the global economy – and they are thriving! This is the theme of our October 5-6 Northeast Shingo Prize Conference: Made Lean In America. A distinguished group of lean leaders will be with us then, as will two dozen lean practitioners from lean organizations large and small, sharing ideas in our “lean lounge.” I hope you’ll plan to be there with us also.

In the meantime, let me hear your thoughts. Can your company make it in America?

O.L.D.

P.S. Request a few of our “Made Lean In America” temporary tattoos
by emailing your address to Lglikes@gbmp.org
(let us know how many you’d like; limit 25 per person).

I was listening today to a song from The Platters (there are just a few of you who will remember that group) that was the inspiration for this post:

“Oh, yes I’m the great pretender,
Pretending that I’m doing well,
I seem to be, but I’m not you see . . .”

There are many would-be lean implementers who are great pretenders: lean pretenders. An all too prevalent phenomenon, lean pretending mostly affects divisions of large corporations. The home office in these cases mandates a process loosely derived from lean thinking, with a public pronouncement of “operational excellence” but also a persistent undercurrent to “look good.”

Looking good always involves a company-wide clean up under the heading of 5S. An employee of one savvy client put it to me, “Those folks have a top-down implementation with a shallow goal of looking good for customer tours. We call it ‘customer-tour lean’.”

Generic scorecards for 5S compliance abound in these companies with division managers competing against a hypothetical target of, say, 80% of perfect. No wonder these scores are typically high; bonuses depend on them…. Inspirational posters about waste and teamwork are also big business too. But little has really improved. Observation at these sites soon reveals that set locations for material and tools may look good, but are not really useful to the people doing the work. One office employee confided to me, “In the words of rocker David Lee Roth, ‘It’s not whether you win or lose, it’s how good you look.’ We’re just putting things where our boss tells us, but she doesn’t know what’s really needed and where it should be placed.”

As lean pretenders “mature,” more lean props are added to the mix: production control boards, kanban signage and work combination charts are common. Managers at these sites say, “We’ve been doing lean for X years.” But even casual observation of the actual work quickly reveals that standards are not, or can not, be followed: Workers do not produce to takt, part stores are either over-stocked or short, Andon lights flash without response. These sites focus on means as if they were the ends: number of kaizen events, number of green belt projects, number of A3’s and so on. An operational excellence manager of a large multi-national corporation who spends 75% of his time visiting sites to assess their lean implementations complains, “Our method for measurement is objective, but it does not drive the right behaviors. Site managers say, ‘Yes, we have kanban,’ and we check a box – check-box lean.” Pretenders.

‘Getting lean’ is the stated objective at these sites, but appearing lean is often good enough. Why do lean pretenders settle for the appearance of improvement when they can have the real thing? The main reason I think is that corporate management in these lean pretenders undervalues the opportunities available through lean, and is instead pursuing traditional avenues to competitiveness such as plant consolidation and outsourcing. In these cases, site managers live quarter to quarter, with no incentive to invest resources in real improvement. Maybe it’s better for them to pretend.

Do you know any lean pretenders? What are the causes of that behavior? Let me hear from you.

The following is a true story but told with time compression – a nine month period shortened to three – in order cover the events in less than two pages:

Paul was a shift supervisor with 32 years on the floor. Hitting schedules was his job. His manager, Bob, related this to me: “Paul is a hard worker who has held nearly every position in production. He wants to do the right thing, but he struggles as a supervisor. His employees don’t listen to him and his department is always running behind schedule. I don’t think he’s up to the challenge.”

When I first approached Paul with the idea of continuous improvement he sighed, “Oh boy thanks. Why me?”

I lied a little bit. “Your manager thinks your experience as a supervisor will be valuable for our pilot project.” Paul just rolled his eyes.

“Is there anything in particular that you would like to work on to improve?” I asked.

“What do you mean by improvement?” Paul responded.

“I mean what keeps you awake at night when your worry about your work?” I said.

Paul thought for a moment and replied, “We’re missing our deliveries . . . which is what I should be working on right now rather than talking to you.”

“What are the major causes of late deliveries?” I asked.

“People,” he shot back, “all they do is complain.”

“Maybe they’re trying to let you know about legitimate problems” I said.

“Hah!” said Paul.

“Okay,” I said, “I have an assignment for you if you’re willing to try it: For the next two weeks write down every complaint you hear, and then ask each “complainer” to show you what they’re talking about. Then, if you’re able to, try to address their complaints. I’ll be back in two weeks and you can let me know then what you’ve discovered.”

“I’ll give it a try,” Paul responded reluctantly.

– – – – – – – – – –

When I returned two weeks later, Paul approached me list in hand with a bounce in his step. “I have a few things to show you,” he said, “Come take a look.”

In the factory, Paul walked over to some plywood risers holding material bins. Pointing to a woman in assembly, Paul declared, “Arlene here complained that material containers on the floor made pulling parts hard on their backs, so I built these risers.” He went on.

“Manny complained that burrs on these parts doubled the time it took them to assemble, so I sent that material back to machining to fix the problem.”

“John complained that these machined parts containers were too heavy and he was the only one who could move them, so they broke the container down into two smaller ones.”

“Who is ‘they’?” I asked. “My employees”, Paul responded.

Paul went on to show me a half-dozen more improvements, including a lazy-Susan part dispenser that he’d built on his own time in his basement. Pointing to it, he said, “This was a pretty good complaint.”

“Can we call it an idea rather than a complaint?” I offered. “These are nice improvements. What did you discover from the assignment?”

“They have some legitimate complaints,” answered Paul, “I’ll keep working on them.”

“Great. I’ll be back in a month,” I said. “You can update me then.”

– – – – – – – – – –

When I returned, Paul showed me a six page list. “There are some really good complaints here, “ he said, “but I can’t keep up with them.”

“Can you get some help from your employees?” I asked.

“Maybe,” Paul said, “Manny has offered to help, and we are kind of caught up at the moment.”

“Who is we?” I asked “Our employees . . . and me,” Paul said.

– – – – – – – – – –

Two months later, I stopped in to visit Paul’s department. The floor looked different: uncluttered and visually clear, with lots of little inventions to assist the workflow. Paul looked different too; he was smiling.

How are the complaints going I said jokingly. “They’re not complaints,” he replied, “they’re good ideas, and now we’re hitting our schedules almost every day.”